Power Factor is a measure of how effectively electrical power is being converted into useful work output. It is defined as the ratio of real power, which performs the actual work, to apparent power, which is the total power flowing in the circuit. A power factor of 1 (or 100%) indicates that all the power is being used effectively, while lower values suggest inefficiencies. In electrical systems, a low power factor can lead to increased energy costs and reduced capacity. Utilities often charge higher rates for businesses with low power factors because they require more apparent power to deliver the same amount of real power. Improving power factor can enhance the efficiency of systems and reduce energy expenses.